Major Danish pension funds invest in new government-backed climate fund

Danish pension schemes PensionDanmark, PKA, and PBU are among the major investors in the new DKK1.2bn (€160m) “Danish Climate Investment Fund” (DCIF) announced by the government in Copenhagen earlier today.

PensionDanmark and PKA are each contributing DKK200m to the new fund, which will be run by a state-owned asset manager named IFU and which will invest in climate-related projects in emerging countries. The projects will rely on Danish renewable technology like wind turbines. PBU’s investment in the fund, meanwhile, totals DKK125m.

PKA is the fund for the health care sector, while PBU is for early childhood teachers and PensionDanmark is for the building sector.

DCIF’s other private investor is Dansk Vaekstkapital, an investment company that was in part established by Danish pension giant ATP. Dansk Vaekstkapital is contributing DKK150m. The balance of the climate fund’s assets, or DKK525m, comes from the Danish government and the IFU itself.

The DCIF is expected to provide its investors an annual return of 12%. Following the DKK1.2bn in seed money, the fund’s backers expect that another DKK200m can soon be raised from private investors. Over the long-term, the DCIF wants to attract up to DKK9bn in assets.

“We are expecting the Danish Climate Investment Fund to deliver solid returns to our members in the coming years, while serving to boost the standing of Danishcompanies in the new growth markets,” said PensionDanmark chief executive Torben Möger Pedersen during this morning’s news conference.

Danish Development Minister Rasmus Helveg Petersen and the Danish Climate Minister Martin Lidegaard were also in attendance.

Added Peter Damgaard Jensen, CEO of PKA: “By becoming part of the Climate Investment Fund, PKA continues its sharp focus on climate investments where we can help reduce global carbon emissions, strengthen Danish industry and ensure a good return for our members.”

According to Danish government officials, the idea for DCIF was hatched in December 2009 during the UN climate summit in Copenhagen. “It was decided then that by 2020, developed nations should mobilise $100bn (€73bn) annually to fund climate protection projects in emerging countries and that a portion of this would come from the private sector,” the officials said, adding that with the fund, Denmark was doing its part.

In a statement, the IFU listed the projects the fund would invest in, including renewables like solar, hydro, and wind; transportation networks; projects that cut greenhouse gas emissions by 20%; as well as insulation and more efficient heating systems. It added the fund would invest in measures aimed at preparing for climate change, such as disaster preparedness, coastal management and information on climate trends. Announcement